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Chartered Accountants

Trusted advisers of all tax compliance and annual accounting issues facing both individuals and small businesses.

Changes to provisional tax

Posted on Apr 16, 2018 by admin

Small businesses, sole traders and contractors can choose a new pay-as-you-earn option rather than paying provisional tax instalments several times a year as changes to pay-as-you-earn tax have come into place this April.

The changes were made to help small businesses pay provisional tax based on their cash flow rather than the previous year’s earnings or estimated earnings for the current year. Paying provisional tax as you earn profit provides more certainty about cash flow.

This new method is known as the Accounting Income Method (AIM). It is optional and only available for businesses with an annual turnover of less than $5 million. Other options for provisional tax still remain in place.

For those who do select AIM, you will need to set it up in your accounting software before your first provisional tax payment of the 2018/19 financial year.

The first AIM payment dates are 28 May for monthly GST filers, and 28 June for two- and six-monthly GST filers, and those not registered for GST. If switching from provisional tax instalments to AIM, your final instalment payment is in early May so be prepared for the overlap in tax payments.

We have been with BDS Hughes Accountants nearly 5 years. Without their knowledge and forthright suggestions we would not been able to experience our high level of success. We are comfortable with the working relationship and ease with which they are able to communicate with us. As we as the normal accountancy service, Garry advised us on Xero accounting and taught us to uses the program in plain simple English. We can say only that we have had nothing but exceptional service and the advise we have received has been correct and perfect for our business, which is why i would not hesitate to recommend their services.
Wendy EvansDirectorThe Roof & Brick Shoppe

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